Rabat – After recording an impressive post-COVID rebound in 2021, the global economy seemed to be heading toward a second recession in 2022. However, experts believe this year harbors significant risks for the global economy and the financial market.
Weathering the upcoming financial storm would require financial institutions to become more resilient and adapt to the changing landscape, according to a newly issued list of recommendations from SAS, an analytics and artificial intelligence company.
In a new report, SAS unveils a list of its predictions of the most impactful trends in the financial sector in 2023 that would help consumers, financial firms, and regulators cope with the changing economy.
After two years of unpredictable shocks, SAS predicts that in 2023, the world economy will make a U-turn back to predictability, as executives and regulators have more visibility over the challenges that lie ahead.
“2023 will not be the year of chaos. It will mark the return of some predictability. The economic impacts of the global health crisis were predictable: pent-up demand, tight labor markets, and a disrupted supply chain,” SAS’ Director of Risk Solutions Consulting, Anthony Mancuso says.
Mancuso further explains that the combination of said factors would further fuel inflation “leading to rate hikes as the obvious policy response.”
The rate hikes Mancuso refers to concern central banks’ raising of the national interest rates, which slows down demand as loans become more expensive. The measure is used as a default policy to tackle inflation.
SAS also predicts that the tightening of monetary policies is set to increase default rates – reflecting the number of consumers of companies unable to pay back loans. Therefore it is essential for financial institutions to conduct “scenario-based analysis, near real-time monitoring and overall organizational agility will be a key differentiator.”
Transitioning to the new era of “customer-centric decision making” will also be vital for the financial sector moving forward, SAS states under its second recommendation.
Financial companies should elaborate holistic strategies to service customers that integrate risk, fraud, and marketing to create a unique customer experience that sets them apart from the competition.
“The increase in fraud losses and the trend toward automation will drive centralized governance of disparate solutions as well as the consolidation of decision-making capabilities at onboarding and throughout the customer journey,” SAS’ Senior Vice President of Fraud and Security Intelligence, Stu Bradley, explains.
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